Hurst v Crampton Bros (Coopers) Ltd & Ors

A second appeal from a decision of the High Court on an appeal may proceed only where it raises an important point of principle or practice, or where there is another compelling reason for the Court of Appeal to hear it. The ordinary real prospect of success test does not apply. Construction of company articles creating pre-emption rights is ordinarily a question dependent on the particular wording and circumstances, rather than a point of general principle. An imperfectly drafted pre-emption article may require implied terms to make its machinery work. Where a share transfer has passed the equitable interest, registration remains subject to compliance with applicable pre-emption provisions.

The claimant sought to enforce pre-emption rights concerning 400 company shares which Mrs Ada Crampton had transferred, or purported to transfer, to Harold Crampton Jnr. The Deputy Master struck out the relevant relief, holding that the obligation to issue a sale notice under article 8(B) had not arisen. On appeal, Jacob J took the contrary view, held that the pre-emption rights had been triggered, and directed the executors to offer the shares to the first defendant.

The executors sought permission for a further appeal to the Court of Appeal. The central issues were whether section 55(1) of the Access to Justice Act 1999 applied to an appeal from a High Court judge hearing an appeal from a Master, and whether the proposed appeal raised an important point of principle or involved another compelling reason.

1. Permission refused. The application was a second appeal within section 55(1) of the Access to Justice Act 1999. The provision applies where the first appeal was heard by a High Court judge, including an appeal from a Master of that court. The contrary submission was rejected.
2. The statutory gateway requires an important point of principle or practice, or some other compelling reason. The test is stricter than whether the appeal has a real prospect of success. A compelling reason may exist where there are strong grounds for thinking that the first appeal judge probably erred, since justice may then require correction. This case did not meet that threshold.
3. Waiver did not raise an important point of principle or provide a compelling reason. It had not been pleaded before the Deputy Master, and the executors had invited summary determination on the relevant relief without identifying any factual issue concerning waiver. It was too late to rely on an unpleaded waiver argument on the further appeal.
4. The construction of pre-emption provisions depends on the particular articles and circumstances. Article 8(B) was to be read as a whole. Its machinery imposed a basic restriction on transfers outside the privileged class, required a sale notice, required valuation by the auditors, provided for an offer to existing members, and lifted the restriction only after the prescribed procedure failed to produce a purchasing member or completion.
5. The execution of the stock transfer form transferred the equitable interest, but the transfer could not be completed by registration until the sale notice procedure had been followed. The proper order would have required the executors to issue a sale notice, but the Court of Appeal declined to entertain an appeal merely to correct the detailed form of Jacob J’s order. The parties could agree the necessary steps or seek directions from Jacob J.

The stay application fell with the refusal of permission. Permission was refused with costs summarily assessed at £1,500.

• Court of Appeal (Civil Division): Permission to appeal from Jacob J’s decision was refused. The stay application consequently fell away.
• High Court, Chancery Division: Jacob J allowed the appeal from the Deputy Master, held that article 8(B) pre-emption rights had been triggered, and directed that the 400 shares be offered to the first defendant.
• Deputy Master: The claim for relief seeking enforcement of article 8(B) was struck out on the basis that the obligation to issue a sale notice had not arisen.